Hosted, On-Demand, Software as a Service CRM systems

The single biggest change in public sector CRM has been the widespread adoption of SaaS (software as a service) CRM applications. SaaS is far more than a change in software technology. SaaS has brought fundamental shifts to the procurement, implementation, delivery, management and user adoption of constituent or customer relationship management software systems.

• Procurement has shifted from an up front capital expenditure to a monthly subscription for as long as the system is used.
• With no software to install or hardware to buy, implementations have become accelerated (and therefore less costly).
• Software delivery is now over the Internet bringing anytime, anywhere access with nothing more than a browser.
• Software management has been delegated from in house IT staff to outsourced experts as part of the subscription fee.
• User adoption has increased in large part due to easier to use systems with more Internet intuitive navigation.

While private industry lead the charge and paved the way, government has recognized the software-as-a-service (SaaS) value proposition and is embracing this lower cost shared services model at at impressive rate and with measurable success. SaaS CRM software systems have been enthusiastically and widely adopted in the commercial sector and based on their success government executive staff and IT (information technology) leaders are leveraging the lessons learned, economies of scale and wider array of support resources in order to also capitalize on the change in procurement, delivery, support and upgrades for CRM software.

Analyst firm Gartner estimates that the market for all software as a service enterprise applications will achieve a compound annual growth rate of approximately 22% through 2011; which is more than double the rate for all enterprise software.

SaaS brings a dramatic shift in the procurement, delivery and support of business software systems. With CRM SaaS, business applications can be evaluated online and the due diligence period reduced as buyers can easily vet the solution prior to purchase. SaaS CRM and related business systems replace the buy-it-up-front capital expenditure with a month to month or year to year software subscription. This purchase model provides great leverage to the customer who can cancel the subscription if the software fails to meet their expectations.

Instead of being installed on site, SaaS applications are centrally managed from a shared services data center and securely delivered over the Internet to the users browsers. Unlike the traditional software license model where the software is procured in advance (with little to no chance of refund) and the vendor achieves incremental revenue streams for annual maintenance contracts, third party add-ons, technical support services, help desk services and other professional services, the SaaS vendors normally include all necessary services into the software subscription amount and are financially vested to make sure the client implementation and post-implementation operation are successful - or risk the customer simply discontinuing the service.

While both the initial capital expenditure cost savings are material, several of the most recognized analyst firms demonstrate that the recurring costs and total cost of ownership (TCO) generally show positive return on investment (ROI) when compared to on-premise or in-house business software systems. A recent total cost of ownership survey conducted by Network Computing, a SaaS CRM solution for 105 users saved as much as $135,000 over three years compared to an in house or on-premise CRM software system. In this case study, the savings were largely achieved by eliminating hardware, software and IT resource labor. A more detailed SaaS versus on-premise total cost of ownership analysis is online at CRM Landmark.com (http://www.crmlandmark.com/saasTCO.htm).

For government IT resources whom are bogged down with the maintenance and support of legacy systems, using the SaaS shared services model can provide superior business solutions for users while allowing IT staff to rid themselves of low value activities such as the endless software maintenance, software upgrades, just in time patching and maintenance licensing renewals and instead focus on information systems more relevant to the agency's mission or more strategic IT projects.

Hosting a government CRM software system can be ideal for the agency that wants to focus on core mission, rid itself of the initial and recurring hardware and software investments as well as the daily system administration required for enterprise business systems. The most common cited advantages of hosting or on-demand systems include the following:

• Hosting agencies forego purchasing software, hardware and support services in favor of renting their IT infrastructure and software application on a pay as you go basis. Government hosting users reduce their initial investment in IT infrastructure and don’t need to continually upgrade and rotate their hardware as new computing power makes old hardware outdated and obsolete.

• Government hosting users take otherwise variable expenses in turn them into predictable fixed monthly expenditures. On-demand CRM software systems deliver trained IT staff as part of the solution at a fixed monthly expenditure. This can be a very welcome proposition for agencies accustomed to a multitude of variable and often uncontrollable expenses – such as implementation costs, consulting costs, hardware costs (including break/fix, upgrades, maintenance and rotation), software costs (including point release upgrades, new versions, bug fixes and user assistance), recurring technical services labor costs (such as systems administrators, network administrators, database administrators, and support and troubleshooting resources). Replacing often uncontrollable costs with more predictable and fixed monthly payments is an overwhelming benefit for some buyers. This long term cost predictability also facilitates more strategic IT planning and investing without due to fewer unscheduled and costly surprises.

• Software as a service subscriptions and hosting permit an agency to focus on managing and improving their mission and constituent services and relieves them of day to day IT (Information Technology) troubleshooting or distractions. Using outsourced IT experts to manage and maintain the information system frees internal management and IT resources for more strategic projects and offloads a function that is constantly changing and often difficult to manage.

• Hosting results in significantly reduced implementation costs. The software is already loaded on high performance hardware and impressive tier 4 state of the art data centers. With a pre-configured and production ready network, SaaS users eliminate application software installation, relational database setup, network operating system configuration and most hardware environmental issues.

• SaaS generally results in reduced ongoing labor costs. In a hosted environment, costs for support staff (such as the Database Administrator (DBA), System Administrator, Helpdesk operators and hardware technicians) are spread over multiple client networks, thereby saving recurring annual labor costs. Hosting also eliminates the recruiting, hiring, management, continued training and personnel issues with these IT labor resources.  Ever increasing and changing technologies make it extremely difficult for many agencies to staff the necessary professionals required to successfully operate an efficient CRM systems environment.

• Hosting provides virtually unlimited growth and on-demand scalability. Hosted CRM solutions can delivery on-demand scalability as your agency needs it, without you having to invest in advance in hardware, platform devices and bandwidth. There’s therefore no unnecessary investments if you don’t require the hardware performance you originally forecasted. 

• In our experiences, hosting plans have been flexible to adapt to agency requests and changes. 

For most agencies acquiring a hosted CRM product, the hosting removes operational distractions such as staff to hire, train and retrain; up front costs for software, hardware and support services; technology “lock-in” and obsolescence, and backlogged or over-budget IT projects. Agency hosting customers are able to apply greater focus to their mission, strategy and highest value added activities, and are not diverted on the issues of maintaining information systems.